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Tuesday, September 28, 2010

Signing an agreement "not to sue" at the time of resignation enforceable unless found to be coerced

Signing an agreement "not to sue" at the time of resignation enforceable unless found to be coerced
Sutherland v Town of Huntington, CA2, #98-9259

In exchange for certain benefits, Patricia Sutherland submitted her resignation and signed a “release agreement.” The release agreement provided that Sutherland would not sue the Town “with respect to, or arising out of [her] employment or the termination of employment.”

Sutherland subsequently decided to sue the Town. A federal district court judge, however, granted the Town’s motion for summary judgment “[b]ecause she signed a release barring litigation of these claims.”

The U.S. Court of Appeals for the Second Circuit [NY] affirmed the lower court’s ruling. The court rejected Sutherland’s argument that her release should not bar her present action, holding that the release was enforceable as its language “unambiguously precludes the instant action in its entirety as all of [Sutherland’s present] claims relate to her treatment as an employee.” As a general rule, courts typically uphold such releases unless it can be shown that the individual was coerced into signing it.

On the issue of coercion, from time to time an appointing authority will offer an employee the opportunity to submit his or her resignation as the only alternative to being served with disciplinary charges.

New York courts have ruled that a resignation submitted in response to such a threat has not been coerced. Why? Because, say the courts, the appointing authority had a legal right, if not the duty, to file disciplinary action against the individual and threatening to exercising a legal right does not constitute coercion.

The leading case addressing this point is Rychlick v Coughlin, 63 NY2d 643. In Rychlick the Court of Appeals ruled that threatening to do what the appointing authority had a right to do -- i.e., file disciplinary charges against Rychlick -- did not constitute coercion so as to make the resignation involuntary.
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